Welfare Reform Bill

Lord McKenzie of Luton Excerpts

Thursday 10th November 2011 Grand Committee

Debate on whether Clause 54 should stand part of the Bill.

[Lord McKenzie of Luton]

My Lords, I have given notice that I intend to oppose that this clause stand part of the Bill in order to be able to return briefly, I hope, to a subject that we have touched on before. Because of its significance, I want to clarify certain points.

Specifically, does this clause introduce a change? Is it a widening of the definition of work-related activity? If it is not, one might ask why the provision is in the Bill at all. We see merit in work placements and work experience but we are trying to understand the boundaries between them and work itself. This is important, as it is being made available and could be mandated for those in the WRAG—those found not fit for work. Are those in the WRAG currently involved in work placements and work experience? If so, what safeguards are being introduced? In particular, what guidance is given to providers in the work programme about all this, and what monitoring is undertaken? Is access-to-work funding available for work experience and work placements as for work? If not, how does that help disabled people move closer to the labour market?

I shall tag one further question on to this debate. It has been reported in the press—I know that the noble Lord is reluctant to comment on press reports—that somebody who has been in the work programme for two years and has not been in employment will come off and go into some form of community service arrangement. Are we likely to see any amendments come forward in this Bill that touch on this issue, or will that be dealt with in regulations, or is it pure speculation that we can ignore?

[Lord Boswell of Aynho]

My Lords, I invite the Minister to comment on the way that I construe the clause, which is that it is facilitative and increases flexibility, which seems to me very welcome. Adding to the list of questions given to him by the noble Lord, Lord McKenzie, could he also say a little about the employment status of people in this situation and, for example, their insurance and other measures of cover? I am more conscious of the situation in relation to children at school. There are sensitivities. It is important that they are got right, but the principle is a good one.

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[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, this summer we increased conditionality for ESA claimants in the work-related activity group with the introduction of the work-related activity regulations. For the first time, those who are able to prepare for a return to work will be required to do so, where it is reasonable.

This measure is another aspect of work-related activity, and thus those groups—such as support group claimants, lone parents with children under the age of five and those with caring responsibilities—who are not required to undertake work-related activity will not be required to do work experience or work placements.

Noble Lords asked, in relation to Clause 16, whether this measure extends the definition of work-related activity, which is one of the questions asked by the noble Lord, Lord McKenzie. The Bill seeks to clarify what may be included by way of work-related activity, rather than extend its meaning. Work-related activity is already defined in the Welfare Reform Act 2007 as,

“activity which makes it more likely that the person will obtain or remain in work or be able to do so”,

and Clause 54 makes expressly clear that this may include work experience or a work placement.

However, an adviser will only place a claimant on a work experience placement if he judges that it will help support the claimant back to work, and if it is suitable. If a claimant feels that the requirements placed upon them are unreasonable, they can request that the adviser reconsider whether an activity is appropriate. Claimants are also able to follow a rigorous complaints procedure if they do not think that they are receiving a satisfactory service. I hope that that explains what the formal protections are to the noble Lord, Lord McKenzie.

The focus of work experience and work placements will be on learning new skills and gaining valuable experience to get a flavour of the workplace environment. They will provide claimants who may have a limited work history with the opportunity to increase their confidence and employability. The precise nature of such placements will depend on what is deemed suitable for the individual, bearing in mind their physical and mental capabilities, and ensuring that necessary adjustments are made.

Placements would normally be short term, but there is currently no set duration, and this will normally be agreed between the adviser and the customer. Work experience and placements must be appropriate to the individual’s circumstances and need not be full-time. For instance, if a person’s health condition means that their mobility and pain levels improve over the course of the day, an adviser might find them a placement for two or three hours in the afternoon. This is quite different from the more challenging demands of paid work, which would normally be a longer-term and less flexible commitment with higher expectations placed on the worker.

The requirement to undertake work experience or work placements will be used flexibly by advisers as part of a range of work-related activities. It is not intended that such placements would necessarily replace other aspects of work preparation. It may be one of a number of work-related activities required of an individual which, in combination, best support a claimant to move closer to the labour market.

In response to concerns that work experience may be used to judge whether an individual is in fact capable of work, this is not the case. A claimant cannot be found capable of work unless they are found capable following a work capability assessment. This new measure will therefore not affect anyone’s underlying entitlement to benefit.

On the question raised by the noble Lord, Lord McKenzie, on access to work, the answer is that it is not available to claimants undertaking work-related activity. For claimants participating in sector-based work academies, funding will be available to help with reasonable adjustments during their participation in that provision. For work experience arranged through alternative sources, reasonable adjustments will be made where necessary to ensure that claimants are able to undertake any work experience or work placement in a safe environment which meets the needs of the claimant. Where necessary, Jobcentre Plus could assist employers with reasonable adjustments, using the flexible fund which is available to an adviser.

I shall clarify the issue of job outcomes for work programme providers. Work programme providers will not be paid for work placements and, therefore, there is no incentive for the provider to encourage a claimant to undertake long-term unpaid work experience, which I think is the underlying concern that the noble Lord has in raising this point. Payment arises for work placement providers only if a sustained, paid, full job outcome is achieved. Furthermore, sustainment payments also ensure that it is not profitable for providers to encourage claimants to undertake unreasonable work-related activity with the aim of making them enter the labour market before they are ready, as that is unlikely to lead to a positive long-term job outcome. I hope that I have described a series of formal protections but also an incentive structure that means that this is not going to lead to any abuse or, if it did, that it would be smack against the financial incentives that we have set up.

In response to my noble friend Lord Skelmersdale’s question on substitute Section 11(3)(c) in Clause 56, I can confirm that the definition of “work preparation” will be the same and will include work experience or a work placement in both clauses.

I owe the noble Earl, Lord Listowel, an answer on mentors. I wish to express our interest in mentors. I am absolutely with him on the importance of mentoring, and as he may or may not know, I have developed my own project with CSV, called Grandmentors, where we test how older, retired people can support youngsters making the transition to adulthood, along precisely that thinking. That project, which I think is one of the very few formal projects with research around it, tries to establish the real economic value to the country of mentoring. I have put my own wallet behind it. I look forward to reporting to him when I have some decent findings.

[Lord McKenzie of Luton]

I am grateful to the Minister for that reply. I am comforted that my concern was not so much about what providers might be up to as about whether work and work experience generally might be almost a way round the WCA for those who are otherwise in the WRAG. I think that the Minister has given us enough comfort on the key distinctions between work experience and work placements, although I note that he said that they do not necessarily need to be full time and that normally paid work would be more onerous. I accept the generality of what he says and that gives me the comfort that I was seeking. I am not sure whether he dealt with the question of employment rights, which is an interesting one, and presumably part of the distinction between work and work placements, but that is satisfactory for my purposes.

Clause 54 agreed.

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Debate on whether Clause 57 should stand part of the Bill.

[Lord McKenzie of Luton]

My Lords, I am grateful to Gingerbread for a briefing on this issue. It has asked us to raise this matter, which I believe has considerable merit.

Clause 57 proposes to extend further the numbers of single parents required to seek work. From early 2012, single parents not in paid work and whose youngest child is aged five or over will no longer be entitled to claim income support. Instead, single parents will be required to claim jobseeker’s allowance or another benefit. On JSA, single parents receive the same amount of money each week as they do on income support, but face a substantial increase in conditionality and risk a payment sanction if they fail to demonstrate that they are actively seeking and available for work.

This latest proposal is estimated to affect 100,000 single parents currently receiving income support who have a youngest child aged five or over. It is understood that the Government anticipate this will save something like £50 million in 2012-13 by removing entitlement to income support from this group of single parents. However, I wonder if there is any revision to that sum, given the state of the labour market and the difficulties that are confronted by people seeking work.

We have an opportunity to introduce a delay to the proposed change and instead align it with the planned introduction of universal credit from 2013. This can be achieved by simply removing this clause from the Bill, which is what this amendment seeks to do, and would mean that single parents with a youngest child aged five would continue to receive income support until universal credit is implemented. At this point, single parents, along with responsible carers and couple families, will be subject to work search and work availability requirements, as outlined in Clause 22; that is, “all work-related requirements”.

Noble Lords will be aware that Clause 57 is an extension of the lone parent obligation policy which we brought forward when in government. The LPO restricts entitlement to income support for single parents according to the age of their youngest child. The reforms have sought to move more and more single parents from income support to JSA. Implementation began in November 2008 and first affected parents whose youngest child was aged 12 and over in October 2009; parents with children aged 10 and 11 were also transferred to JSA. In October 2010, single parents with children aged seven, eight and nine switched into JSA. In previous years, single parents have been given clear advance notice of six months in order to prepare for the switch from income support to JSA. However, we have not yet passed this piece of legislation and this will be implemented in April 2012, which is certainly in the near term.

Some 57 per cent of single parents are in paid employment and many more want work as a means of increased income and financial independence. Those are key motivators, along with personal independence, the opportunity for social interaction and to set a good example for their children. Indeed, 42 per cent of single parents say that having almost any job is better than being unemployed and on benefits. Critically, single parents require jobs that allow them to be there for their children when necessary. With only one parent to do the school run, care for children when they are ill and support them with their schoolwork, jobs with flexible working patterns are absolutely vital, as is access to affordable, high-quality childcare. We have discussed that on a number of previous occasions. Flexibility does not just mean part time but can include job share, compressed hours in term time and annualised hours. However, employment opportunities that provide the degree of flexibility that single parents need are few and far between, particularly in difficult economic times.

The particular reasons for delay are as follows. On 7 October this year the Government announced an extension of childcare support to those working under 16 hours to be implemented as part of universal credit from October 2013. Currently, through working tax credits, as we are aware, single parents working 16 hours or more a week can access support of 70 per cent of their childcare costs up to £175 per week for one child and up to £300 per week for two or more children. This provides vital support to working parents on low to middle incomes and makes all the difference as to whether they can make work pay. However, it has always been a challenge for those with caring responsibilities or those who have been out of work for some time to make the leap from no work to 16 or more hours a week. So the further investment to provide childcare support at the same level for those working under 16 hours a week from 2013 onwards is welcome. This support will be of particular benefit to single parents of five and six year-olds who move on to JSA from income support after a period of time looking after their child. That is why it makes no sense to push 100,000 single parents into this position 18 months before the new childcare support is available.

In addition to the logic of delaying the switch from income support to JSA to enable single parents to access the new childcare support that will be available under universal credit, I suggest that there is a broader rationale in aligning this change with the overall implementation of universal credit. The transition from the current benefits and tax credits system to unified universal credit will require a huge administrative change in order to transition all existing claimants on to the new system. When resources are stretched, it would therefore be both needlessly disruptive to single parents and an unnecessary cost to the state to put the same group of claimants through two substantial administrative processes within a relatively short period of time—ending entitlement to income support in early 2012 and then a migration on to universal credit for existing claimants from April 2014.

It is also important to note that the Bill we are considering introduces changes that will affect the job search requirements of lead carers in couples families which will be implemented from 2013 as part of universal credit. From this point on, nominated lead carers in joint couple claims will be required to seek work when the youngest child reaches the age of five and be subject to increased conditionality accordingly. There is therefore no clear rationale for why single parents should be subject to identical changes in advance of nominated lead carers in a joint claim.

According to the Office for National Statistics, in the three months from June to August 2011, unemployment rose to 2.57 million, an increase of 114,000. The fall in the number of people employed was 178,000 and has been particularly driven by the loss of part-time jobs, down by 175,000. Single parents rely heavily on part-time work as this allows them to juggle their caring responsibilities with work. The total number of people claiming JSA is 1.6 million, of which 124,000 are single parents. The total number of single parents claiming JSA increased by 48,000 over the 12 months from August 2010. Unemployment is at a 17-year high and job creation in the private sector has so far failed to plug the rising tide of redundancies and job losses in the public sector. Overall, the picture is bleak, with markedly fewer family-friendly jobs available and increasing numbers of single parents trapped on jobseeker’s allowance, so moving an additional 100,000 single parents from income support to JSA when their youngest child reaches five is a blunt instrument in the current economic climate.

Increased conditionality and tougher sanctions only serve to add unwarranted pressure on single parents when suitable employment opportunities remain sparse, childcare costs continue to rise faster than earnings and single parents are not able to take advantage of new childcare support that will be introduced from 2013. Single parents will struggle to find work that is sustainable and that fits around their caring responsibilities when faced with increased conditionality, limited access to support for childcare costs, limited opportunities to access training and further education, low growth and a stagnant job market. I oppose the clause standing part.

[Baroness Lister of Burtersett]

I had not planned to speak but I support the opposition to the clause standing part. It seems eminently sensible that we should postpone this provision. I am prompted to speak by a rash of e-mails that I received today from people who clearly feel strongly about it, although I shall read from only one of the e-mails. However, I am ambivalent about the issue of lone parents and paid work. On the one hand I was a member of the Commission on Social Justice which, to a lot of criticism, recommended that lone parents with children aged 12 and over, I think, should become part of the workforce. One of the reasons for that, as my noble friend said, is the importance of paid work to women as a source of independent income and so forth. On the other hand, it also worries me that much new policy underestimates the importance and value of care work and the time and energy it takes. So, as I say, I am ambivalent. However, I think that lowering the age to five is perhaps going too far. It is putting a lot of strain on lone parents in terms of the competing responsibilities that we are placing on them. That is very much reflected in the rash of e-mails that I received today. I shall read out from one. I do not necessarily agree with everything in it but it reflects what people are feeling. This e-mail is in fact not from someone directly affected but from a grandmother who would have been affected had this rule applied earlier. She says:

“I have been informed that you are discussing legislation which will force mothers who are [on] welfare to look for a ‘job’ when the youngest is five years of age. I am a grandmother now but raised three children on welfare following marriage breakdown. It was not a lot of money but I had control of it”—

an issue that I have been raising in other contexts—

“and was able to survive and care for all my children. I did try going out to work but it was almost impossible to cope first of all with having time with them. Keeping tabs on where they were every day of the week was a nightmare. When I lived on welfare they knew they could come home after school bring their friends with them home if they wanted. Much safer for everyone. The proposal that children have to be out of their home from leaving for school in the morning until I get home later in the evening”—

I myself would not put it this strongly—

“is nothing less than child abuse—adults are exhausted after doing such hours”.

I think that we should be conscious of that point on exhaustion. We are asking an awful lot of lone parents. She continues:

“How are children supposed to develop with any feelings of confidence and security if they are constantly shunted around from pillar to post, treated as if they are an encumbrance, rather than being valued by the society”.

I shall not read any more. However, there is a feeling that we are devaluing the work of caring for young children whether it is done by mothers or fathers. This opposition to the clause standing part would allow us to pause and think again about whether this is the right way to go, particularly in the current labour conditions, and whether it would not be better to wait until universal credit is introduced and the childcare changes referred to by my noble friend are made. I hope that the Minister might be willing to pause and reflect on this matter.

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[Baroness Hollis of Heigham]

Perhaps I could reinforce a point. We know from all the research, going beyond Jane Millar right back to the American research, that a lone parent who goes out to work and retains that work, if it is sustainable, benefits from the lift out of poverty. I entirely accept that that is important for the family as well as for role models. However, that is possible if and only if she has childcare that she trusts. Very often that childcare is from a family member, who is often a grandparent. The grandparent can address the problems of the child in the transition period and so on. Yet time and again we are doing nothing to recognise the role that grandparents may play and instead we are going to impose in-work conditionality on them, taking them out of the caring function that they would voluntarily and willingly embrace for everyone’s benefit. We will expect two generations to work and for the child to be somewhere out there.

[Lord McKenzie of Luton]

My Lords, I thought that this started off as a relatively straightforward debate, but I am delighted that it has expanded into a huge philosophical debate which is very important. I thank all noble Lords who have spoken at least in support of the opposition to the clause. I think that some would go quite a bit further but there are important issues around childcare, the time spent with children, the propensity of the mother to want to work and the quality of substitute childcare. In one way or another, each of those has been touched on by noble Lords. I think that it was the noble Baroness, Lady Lister, who expressed the view that she was not totally signed up to the concept of lone parents in work when their children are as young as five, and I acknowledge that.

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Debate on whether Clause 59 should stand part of the Bill.

[Lord McKenzie of Luton]

My Lords, this is by way of a serious probe to understand the Government’s plans and their progress on supporting individuals with drug and alcohol dependency. Clause 59 essentially removes the regime set out in the Welfare Reform Act 2009. Those involved in considering that legislation will recall that it ended up in a considerably better place than where it started. The noble Baroness, Lady Meacher, who is not in her place, should be able to claim considerable credit for encouraging the Government of the day to move from where they were to where they ended up.

The thrust of those provisions involves requiring claimants in the JSA regime to take part in a substance-related assessment where there are reasonable grounds for suspecting that they have a drug dependency which affects their prospects of obtaining or remaining in work. The jobseeker’s agreement is suspended if the individual engages in a voluntary rehabilitation plan. Such a rehabilitation plan could involve submitting to treatment, possibly at a specified institution. In the event of somebody failing to engage in such a plan, a mandatory plan could be imposed, but the legislation is very clear that such a plan cannot require a person to submit to medical or surgical treatment. A similar regime is provided for in the legislation for people in the work-related activity group but not, of course, the support group. Perhaps the Minister can remind us what, if any, regulations to introduce these measures were eventually promulgated—none, I suspect.

The information pack provided with this Bill states:

“It is considered that provisions from the Welfare Reform Act 2009 are too narrowly focused, impractical and expensive. In December 2010 the Government published a Drugs Strategy outlining first steps to ensuring the benefit system supports effective engagement with recovery services, which is considered to be more successful than coercion. For these, existing powers can be utilised”.

Perhaps the Minister can set out for us how the first steps are progressing.

On the Government’s drugs strategy, page 23 says:

“The first step is to ensure that the benefit system supports engagement with recovery services. We will offer claimants who are dependent on drugs or alcohol a choice between rigorous enforcement of the normal conditions and sanctions where they are not engaged in structured recovery activity, or appropriately tailored conditionality for those that are. Over the longer term, we will explore building appropriate incentives into the universal credit system to encourage and reward treatment take-up. In practice, this means that those not in treatment will neither be specifically targeted with, nor excused from sanctions by virtue of their dependence, but will be expected to comply with the full requirements of the benefits regime or face the consequences. Where people are taking steps to address their dependence, they will be supported, and the requirements placed upon them will be appropriate to their personal circumstances and will provide them with the necessary time and space to focus on their recovery”.

Clearly, the availability of support services will be key to this approach. Perhaps the Minister can give us an assessment of what is currently provided and available. The provisions that are being removed from existing legislation contain powers to extend the application to alcohol. Perhaps the Minister can say what the Government have in mind for those with an alcohol dependency; what services are available and what assessment has been undertaken.

The 2010 drugs strategy also says:

“We will also look at amending legislation to make it clear that where someone is attending residential rehabilitation and would be eligible for out-of-work benefits, they will be deemed to have a reduced capability for employment and will therefore be automatically entitled to Employment and Support Allowance”.

Is this still the plan and where is the legislation that provides for that? Presumably entitlement would cease after 365 days, maybe earlier if the claimant has a partner with modest income or capital. Whatever the limitations of the 2009 legislation, it provided a range of protections for individuals: a substance-related assessment could only be conducted by an approved person; relief from certain tests if the claimant provided a permissible sample, but not an intimate sample; an absolute bar on having to submit to medical or surgical treatment; protections concerning supply of information; and protection in criminal proceedings in respect of information provided about drug use. How will these issues be addressed in the new arrangements?

I should also be clear that we share a common goal of supporting people to live a drug-free life. An opportunity to get and sustain a job is an integral part of helping to achieve this, but we are entitled to know and have on the record what the Government plan in this regard.

[Baroness Hayter of Kentish Town]

My Lords, I will add a few more words on the 2010 drugs strategy. I very much welcome its view that the benefits system should support effective engagement with recovery services. It considers that this is more successful than coercion—a view that I strongly hold. As my noble friend said, the strategy covers all drug problems, including the severe misuse of alcohol. About 400,000 benefit claimants—about 8 per cent of all working-age claimants—are dependent on drugs or alcohol. I welcome the strategy of increasing the number of such claimants who engage with treatment and rehabilitation and go on to find employment.

I will ask a little more about the plan, quoted by my noble friend Lord McKenzie, about the choice between vigorous enforcement of the normal conditions and sanctions where claimants are not engaged in structured recovery activity, and appropriate tailored conditionality for those who are. How will that conditionality be decided?

My bigger question is: how can such claimants engage in structured recovery activity when the result of government cuts is that there are ever fewer agencies offering structured day programmes or any other form of treatment? I declare an interest as a trustee of Camden-based CASA. The noble Lord must pass it every day on his way back home. For 27 years CASA has provided in Camden a range of services for alcohol and drug misusers and their families.

Our dual diagnosis service for those with mental health and alcohol misuse problems has been ended. Our families service has been curtailed. Our older persons service has been halved. Our back to employment service has been closed. This month we had to shut our Camden day service centre in Fortess Road, which was well known, and sell the building. Many of our staff were made redundant and our premises were closed. That is the impact of the cuts on local government and other potential funders. My question to the Minister is not about the intention behind this, but about where people will get the services and the help that they need to be able to respond to the strategy. Furthermore, with the Government's withdrawal of 100 per cent of its grant to the National Agency on Alcohol Misuse—Alcohol Concern, as it is known—which I set up at the Government’s behest and with government money in 1984, who will help set up, co-ordinate and make known such services to the claimants who need them?

I would also like the Minister to tell us how those for whom structured recovery activities are appropriate will be identified. Also, how is structured recovery activity to be defined? I have been trying for 27 years to define it for our clients and have failed. I do not mean that as a joke: it is very difficult because it is a highly personalised service. I would be interested to know the Government's definition of structured recovery activity. We also know that the drug co-ordinators who were responsible for building the relationship between Jobcentre Plus and external agencies in the drugs field, such as treatment and probation services, have now been abolished. Who is expected to co-ordinate the work of Jobcentre Plus with the providers of these services in their local community?

The impact assessment for the drugs strategy states that:

“Employment support will be funded on an outcomes basis, using benefit savings freed up when people engaged with recovery services move into employment or full-time education”.

The assessment suggests that this funding provision will be delivered via the work programme. Will the Minister tell us what proportion of work programme providers are offering support with drug and alcohol issues, and how many people have accessed the support? Furthermore, as I hear that St Mungo’s and other voluntary agencies are receiving none of the anticipated referrals from the work programme, can the Minister outline where such services are being provided and where participants are being signposted to?

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[Lord Freud]

My Lords, I like to be able to flesh out these adverbs—no, they are not adverbs. My grammar is slightly frail. The answer is that I cannot be any more specific. If that is news, I am not in a position to provide any more definition.

Clause 59 removes Section 11 and Schedule 3 from the 2009 Act, and also removes the provisions which Schedule 3 inserted into the Jobseekers Act 1995 and the Welfare Reform Act 2007. We know that the vast majority of people with substance dependency issues eventually want to break free of their addiction. The National Treatment Agency reports that, last year, more than 200,000 people in England entered treatment. That represents about two-thirds of all those with dependency issues. In 2010-11, 27,969 adults left treatment in England free of dependency, which is an increase of 150 per cent compared with 2005-06. Waiting times continue to reduce—96 per cent get into treatment within three weeks of referral. In England, we spend more than £400 million on drug treatment and this budget has not been cut. We want to build on that. We believe that the right approach is to offer support and encouragement for those who want to tackle their substance addiction. We are therefore ensuring that our advisers have the confidence to engage in the often difficult conversations with those who they believe have dependency problems, that they understand the issues that addicts face and that they work in partnership with local treatment agencies to improve referral rates. By encouraging closer working between Jobcentre advisers and treatment service providers we will increase the number of people moving into sustained recovery.

If claimants decide to take up the treatment opportunities available to them, we will look to ensure that they have the opportunity to focus on that treatment and make it succeed. This is not being soft on addicts. The choice to tackle addiction is not an easy one, as anyone who has tried will confirm. Claimants who decline the offer of treatment will be expected to comply with their ordinary full labour-market conditions as a requirement for continuing to be entitled to their benefit.

The noble Lord, Lord McKenzie, asked about universal credit. We are clear that the imposition of work-related requirements under universal credit must not conflict with an individual’s treatment regime. We want to maximise every individual’s chances of an early move into work. For those with substance dependency, the first logical step will often to be to confront their addition, and we do not want simultaneously to impose labour market requirements that make it challenging or even impossible to complete treatment. This will be our guiding principle under universal credit and we will make sure that this can be achieved. The structure of universal credit legislation makes this relatively straightforward. We have considerable flexibility in the powers we are taking in the Bill to ensure that we can tailor work-related requirements to fit with the circumstances and capability of an individual. We will be considering how best this can be done as we develop regulations.

The provisions inserted by the Welfare Reform Act 2009 are inappropriate and likely to have unintended adverse consequences for substance or alcohol-dependent claimants, their communities and the public purse. The provisions have not been commenced and do not reflect this Government’s direction of travel in dealing with the very difficult question of drug and alcohol addiction, nor do they take account of the introduction of universal credit, which will replace both the income-related strands of JSA and ESA in due course. Hence we seek to repeal them. I beg to move that Clause 59 stand part of the Bill.

[Lord McKenzie of Luton]

I am grateful to the Minister. I should say that the purpose of raising this issue was not to mourn the passing of Schedule 3 but to understand where the Government were heading in its place. Perhaps the noble Lord dealt with it by saying that this can be accomplished by regulations, but the strategy says that those who are undertaking residential treatment would be deemed as not having been in the work-related activity group or its equivalent in universal credit. Would he say that the Bill provides the necessary flexibility to achieve that or is something else expected to deal with that?

Perhaps the Minister could also say something about the protections, which was one of the important features of the 2009 Act, that if somebody declares that they have a drug dependency—effectively owning up to something that could be a criminal offence—what safeguards does the noble Lord have in the current arrangements that would provide protections for individuals in those circumstances, assuming that the noble Lord believes that those protections should be there?

[Lord Freud]

To take the first question, we already have amended the regulations. We did that from 28 March 2011, amending the regulations relating to employment and support allowance. It is clear that those in residential rehabilitation for alcohol or drugs should be automatically treated as having limited capability for work while they are in residential rehabilitation, and this will help them have access to benefit at a time when they are focusing on their treatment.

On the matter of the protections, I am going to have to offer to write to the noble Lord. That is a pretty complicated matter. When we are not doing the things for which the protections were incorporated, it is difficult to understand where we might need some protections. I will have a think about that and write to the noble Lord.

[Lord McKenzie of Luton]

I am grateful to the Minister for that and I think that this deals satisfactorily with the purpose of the probe.

Clause 59 agreed.

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[Lord Skelmersdale]

My Lords, many years ago when my noble friend Lord Brooke was my temporary boss in Northern Ireland, never in a million years did I expect that he would ever be described, or indeed would describe himself, as St Sebastian. The reason I mention that is that I knew that when he became Secretary of State, he had moderately recently been a Treasury Minister. My job in Northern Ireland, inter alia, was to look after the Social Fund in the then 32 Northern Ireland social security offices. It quickly became apparent that the calls on the Social Fund in any particular office at any particular time were extremely erratic. I asked my civil servants if London would object if I moved money around the system in order to try to balance it up. Of course the following year I had to do it again because of that erraticism.

It is all very well expecting the Social Fund, which is expatriated to Scotland, Northern Ireland and Wales as a whole, to operate well with ring-fencing, but I find it absolutely impossible to believe that ring-fencing can ever apply when it is expatriated to local authorities in England for the simple reason that one local authority will build up a certain amount while another will be permanently in deficit. That is not going to help the people whom the Social Fund is intended to help in the first place.

[Lord McKenzie of Luton]

My Lords, we have added our names to Amendments 86ZZZB, 86ZZZC and 86ZZZD and we support the other amendments in this group. We have our own amendment, Amendment 86ZZZEB, and I should say to the noble Lord, Lord German, that I am happy to accept his amendments to my amendment. Perhaps we can go through the Lobby together when the opportunity arises.

The Social Fund, particularly the discretionary component, helps some of the most disadvantaged and marginalised individuals in the country. We have been given a lot of historical perspective on this, but my brief says that the fund has its origins in the exceptional needs payments scheme introduced by the Labour Government in 1948. However, some may go back a bit further. We should recognise that the fund as it operates today is not perfect. Indeed, a number of noble Lords have made that point. When we were in Government, we paved the way for change and consulted on it. The case we made was the one referred to by the noble Lord, Lord German, which was that the system was short-term, passive and complex. Its role was as a sticking plaster to deal with short-term crises and did not address the longer-term challenges which individuals face, particularly those of financial and social exclusion.

That said, we should never lose sight of the importance of a safety net for those who are in desperate need. We have all received powerful testimony from a range of organisations to the difference that a crisis loan or a community care grant can make when individuals with acute needs are faced with very difficult circumstances. It helps the poorest and the most vulnerable people in our society and we know how an early intervention can prevent a slide into even more desperate circumstances.

The case has been made by others, particularly in a very powerful presentation by my noble friend Lady Lister, as to why we should continue to support this. I would like to comment on some of the other contributions. Perhaps I may say to the noble Lord, Lord Brooke, that the great mistake he made was to confront Derek Hatton with a Socialist Worker under his arm. It should have been Militant, and then he might have got a better reception. So far as ring-fencing is concerned, I recall one party conference when a certain Dennis Skinner was speaking from the platform. He addressed the mayor who had come to open the conference and suggested that he should melt down his chain and put it into the housing revenue account, so there are precedents as well.

One of the difficulties I have with the government proposals is in trying to understand precisely their vision of what should result from this process. On page 25 of Local support to replace Community Care Grants and Crisis Loans for living expenses in England, the Government’s response to the call for evidence, they say:

“There is no expectation or desire from central government that the new service will mirror the current Social Fund scheme in whole or in part”.

If that is right, what is the Government’s vision? What are they seeking to achieve? My blood ran cold when I turned to page 27—this was the point made by my noble friend Lady Lister—where it says:

“One of the design issues raised by a large number of respondents is whether provision should be in the form of cash payments or goods and services, including for example food parcels and both new and re-conditioned household items”.

The next paragraph says:

“The need to offer recipients choice or control over the item they received was not generally considered a requirement and by a number of respondents it was thought to be undesirable. There was a strong sense that if there is a genuine need recipients will accept the support that is offered”.

What sort of country are we living in where we have those sorts of rules? It is “take it or leave it”, living off the scraps from the supermarket when they clear the shelves at night.

My noble friend Lady Sherlock pressed on a range of points concerning funding. I shall address Appendix C of the document I just referred to. Bandied around somewhere in the text is a figure of £178 million, but this annexe says it gives us,

“National-level data from the latest available financial year and 2005-6”.

The year then was 2009-10, so it was not as up to date as my noble friend. It says:

“We have indicated our intention and already taken action to manage the current levels of demand and spend for Crisis Loans back towards 2005-06 levels. 2005-06 data should therefore be regarded as more representative of the levels of demand and spend at the point of transition to the new local provision”.

The gross spend on crisis loans in 2009-10 was £67 million, but what was it in 2005-6? It was £20 million. Is that what the Government are about now, trying to scale back from even the 2009-10 figures to just £20 million in allocating moneys to start this process? It is an absolute disgrace if that is the proposition, and this is supposedly not meant to be about saving money.

Notwithstanding that, the information we have had is that the Government are cutting back on some of these arrangements. Crisis loans for items only following a disaster and crisis loans for living expenses have been cut back from 75 per cent to 60 per cent, supposedly aligning with the hardship payment rate under JSA. Crisis loans for living expenses are limited to three in a rolling 12-month period. There is already a process under way to cut back on this spend before we get into the new arrangements. I would like to understand the rationale and the justification for that.

I thoroughly and wholeheartedly support the proposition concerning ring-fencing. What we are talking about is money that goes into local authority budgets, ring-fenced for a specific purpose. The Government have made great play of reducing ring-fencing on local authorities—as we did in Government to a certain extent—but as a technique and as a means of ensuring that the money that goes through to local authorities is spent on that endeavour, it is well tried and tested. There is not a problem in doing it. Indeed, one of the experiences we need to reflect on is what happened to the “Supporting People” programme. That programme was originally ring-fenced. It was then un-ring-fenced, I think with the support of the CLG Select Committee, but at least in those circumstances local authorities were required to continue to report centrally about how that allocation had been dealt with. It was not rigid but at least there was a reporting requirement. I do not know, but perhaps the Minister can tell us, whether any such arrangements are proposed so far as the Social Fund is concerned.

My noble friend Lady Hollis was absolutely right to identify the issues that will arise under two-tier authorities. She suggested that one way of dealing with this would be to have a mandatory allocation to districts, but that raises the whole question of who people will engage with at the local level to get the support they need. Most of their needs will be related to housing, which is at the district level, but some may be related to adult services, which are the functions of a county council. Where people go and what the process will be is entirely unclear.

The noble Earl, Lord Listowel, supported the issues around ring-fencing. He made the point, as did other noble Lords, about the pressure that is on local authorities at this time. They have had dramatic cuts made to their budgets and some of those cuts have been front-end loaded. In some respects, they have had greater responsibilities imposed on them under the Localism Bill. Indeed, what are hard-pressed councils to do when such extraordinary pressures are placed on them? They must try to make decent decisions so as to protect and support their communities. This is another example of the Government, in the guise of localism, pushing down on local authorities and giving them the supposed problem that they are not prepared to face up to and deal with themselves.

My noble friend Lady Turner centred her speech on issues around domestic violence. I wholeheartedly agree with her, and that is why the amendment should be supported.

The greatest difficulty with all this is being able to see what the Government’s vision is. Local authorities are innovative and many of them will work very hard to protect in every way they can the vulnerable citizens in their communities, and indeed those from outside their communities. The noble Lord, Lord Kirkwood, made the point about connections. If local authorities put in place a focus on people with local connections, it will particularly disadvantage those whom the Social Fund is designed to help—the people who are settling back into a community and perhaps do not yet have a fixed abode. They may be rough sleepers or—I think this is the expression—they sofa-surf, which is when they kip down for the night on friends’ sofas here, there and everywhere. Helping those people means that a barrier cannot be put on some localised connection. I would support all the amendments which seek to avoid that.

The noble Lord, Lord Kirkwood, was absolutely right to say that we need consistency of approach and transparency in all this. In part, that is what our amendment seeks to do: it would establish that there should be mechanisms to make sure that we get consistency. As I say, that has to be on an England basis because separate and well funded schemes will operate in Scotland and Wales. That is fine, and we should be happy with that. One of the other challenges here is that these changes are being introduced at a time when there is a whole maelstrom of change going on around localism, welfare reform, our health and social care provisions, and what legal aid support people can receive. In the midst of all that, these changes are being brought forward. They will affect the most vulnerable people in our society, and if we have a duty as Members of Parliament and certainly as members of a Government, above all we should look to protect them. These provisions simply do not do that.

[Lord Freud]

My Lords, the current discretionary Social Fund is clearly in need of reform, as several noble Lords agreed today. From 2006 to 2011, the number of crisis loan awards tripled. The evidence does not suggest, however, that this increase reflected an underlying increase in genuine need, as it was largely independent of the recession. Analysis of the increased demand showed that it was driven by young single people on jobseeker’s allowance, many of them still living at home, rather than reflecting a more general trend across all benefit client groups. Strong action has already been taken to get spending under control, and demand has already reduced markedly.

Analysis of the current community care grants scheme shows that the remote operation of a highly discretionary scheme may not deliver the best use of a limited resource. The scheme is often poorly targeted due to the lack of integration with the wider social care agenda. Local authorities and the devolved Administrations are better placed to determine and support the needs of local vulnerable people than the current centralised system.

Clause 69 paves the way for reform of the discretionary Social Fund. Community care grants and crisis loans for general living expenses will be replaced by new local provision designed and delivered by local authorities in England and the devolved Administrations in Scotland and Wales. Budgeting loans and crisis loans for alignment to benefit or wages will be replaced by a national system of advances of benefit through the payments-on-account provisions set out in Clause 98. So the majority of the discretionary element of the Social Fund money will still be administered at national level because it is closely aligned to the ongoing benefit system: that is the most efficient way to do it. That discretionary loan fund pot at national level, which revolves, is currently standing, I believe, at £1.2 billion. I compare that with the £178 million going locally which is divided into grants, currently at £141 million, and general living expenses at £36 million. That does not add up to the full £178 million because there is another £1 million of transition funding.

[Lord McKenzie of Luton]

Will the Minister explain where the figure of £36 million comes from? The 2009-10 figure for crisis loans for general living expenses is £67 million. The Minister is clearly one year on from that, but has the figure halved over that period?

[Lord Freud]

If the noble Lord looks at page 11 of the government response document, it shows that the tripling was clearly driven by a phone-based service. As I said, we are getting that more under control. The 10-year average spend is £30 million, and clearly we are aiming to get back down to more sensible levels through this method, as I said.

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[Lord Boswell of Aynho]

My Lords, would it not also be reasonable, in cases of very substantial disasters extending perhaps beyond the compass of a single block of flats—although that would be a serious local tragedy—to look at the Bellwin scheme, which as I understand it is designed to deal not with the initial tranche of costs but with the substantial extra costs that local authorities will face if they are confronted by a major natural or physical disaster?

[Lord McKenzie of Luton]

The noble Lord is absolutely right. That was deployed in relation to the flooding in Cumbria.

[Baroness Lister of Burtersett]

I raise this to ask not so much about housing but about people's white goods and furniture that may have been destroyed for whatever reason. My understanding is that, at present, they can turn to discretionary crisis loans in such cases.

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[Lord Freud]

Local authorities have a number of duties under which they are bound, and those are the duties to which I am referring. Let me continue.

[Lord McKenzie of Luton]

Could we ask the Minister to provide us with a list of the duties and the statutory references to them so that we have them on the record? We will then be able to see clearly what is covered and what is not.

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[Baroness Hollis of Heigham]

By allocation.

[Lord McKenzie of Luton]

I think there are two issues. First, what is the total pot for the rest of the spending review? I think the noble Lord has confirmed that that is £178 million—fixed or to be uprated by inflation?

[Lord Freud]

Fixed.

[Lord McKenzie of Luton]

So it is declining in real terms. The second issue is how it is allocated among local authorities. Will it be done as part of the general revenue support grant, so that it gets mixed up with all the other things, or will it be dealt with separately?

[Lord Freud]

I understand that it is fixed for two years, which takes us to the end of this spending review.

I turn now to a number of questions raised by my noble friend Lord German, who asked about the devolution aspects. The Scottish Government have consulted on the approach that they might take to deliver the new local provision. They considered local as well as Scotland-wide approaches and they now have to decide whether the local approach, in line with the English approach, or the centralised approach is best. If the Scottish Government decide to go down the centralised route, that would be an interesting test case of whether devolving down to the local level, to populations of between 12,000 in the City of London and 1.4 million in Kent, or centralised to cover 5.2 million people across Scotland, is the best way to administer this sort of discretionary support. Clearly, we have taken the view that the closer to the populations served, the better.

If the Scottish Government choose to divert funding from other sources to top up the funding they receive from the UK Government, that is their choice, but they will have to tell the Scottish people from where the money has been diverted. My noble friend asked about legislative consent motions, but those are not necessarily for Social Fund reform. On the accounting officer question, for the national payments on account provisions that will clearly be the DWP Permanent Secretary. I shall come back to him on the devolved moneys.

I hope that I have adequately explained why these amendments are necessary. I shall reflect on the points that have been made so powerfully. Meanwhile, I would urge the noble Baroness to withdraw her amendment.

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Clause 74 : State pension credit: capital limit

[Lord McKenzie of Luton]

My Lords, we gave notice of our intention to oppose the Question that Clause 74 stand part of the Bill, but we have had discussions along the way which, for the time being, we find satisfactory, so we shall not oppose the Question.

Clause 74 agreed.